Thank You

Error.

The game of corporate governance is frequently a war for political control. Reformers who fear the power of business have been trying to get money out of politics for more than a century, though every attempt seems to bring more money into politics and more politics into business.

The movement currently seeks more disclosure of corporate political donations, in the hope that shareholders or customers will be moved to punish public companies for daring to interfere with campaign politics. Such reformers think it's much better to have politics interfering with the corporations.

Reformers often say that "sunlight is the best disinfectant," but many of them would prefer political Lysol, political ammonia, or political hydrochloric acid. Sunlight is simply the best they can hope for in this republic, where the lawmakers regulate themselves and the people don't care all that much.

The Securities and Exchange Commission has now stumbled into the fray. It started in 2011, when a gaggle of law professors filed a petition asking the commission to mandate full disclosure of corporate political contributions, including those given indirectly and anonymously. They were frustrated by the inability of Congress to pass a law mandating full disclosure and the inability of the Federal Election Commission to require disclosure.

A well-organized campaign has produced half a million letters to the SEC, mostly supporting the idea of a new rule, and the commission staff has put discussion of a corporate disclosure rule on the agenda, though it has set no timetable for action.

Perversion of Privacy

Under the 2010 "Citizens United" decision of the U.S. Supreme Court, corporations can spend unlimited sums on issue-oriented advertisements, which are ads that don't urge a vote for or against a candidate; they just praise or condemn the candidate for his stand on a particular issue.

Although despised and reviled by reformers from President Barack Obama on down, Citizens United was not particularly welcome in the executive suites of public corporations. It seems that CEOs don't want to get down in the arena if they will be seen throwing political dirt. They are well aware that their investors and customers include people of both parties holding widely different views on many issues, which means that some hold views that the executives believe to be antithetical to their corporation's interests.

For example, an investor in an oil company might be in favor of limiting carbon emissions. A customer patronizing a nonunion chain of stores might favor laws encouraging union organizing. Few company executives want to underscore such divisions with the people who pay their salaries. Those who do may pay a price: Whole Foods CEO John Mackey expressed his libertarian views, and some customers organized a boycott.

Careful executives, however, can launder their money through organizations with the right 501(c)4 tax status, or "social welfare" groups. Two well-known 501(c)(4) groups are Crossroads GPS, on the right, and Priorities USA, on the left. Corporations also can give money to tax-exempt trade associations and educational organizations, and those groups can spend money on issue-oriented ads without disclosing the original sources of their funds.

Inept or Handcuffed

Tax-exempt campaigners inhabit a black hole of financial information created by the Internal Revenue Service and the Federal Election Commission -- which respond to the wishes of Congress members in need of bankable support. The IRS should rewrite its rules to eliminate tax-exempt status for organizations taking active roles in politics, and the Federal Election Commission ought to require instant Internet posting of all political contributions and expenditures, but most congressmen of both parties are not inclined to interfere.

The SEC petitioners say (unconvincingly) that they are trying to help shareholders defend themselves from political risk assumed by the companies in which they invest.

"Shareholders must have information about the company's political speech; otherwise, shareholders are unable to know whether such speech advances the corporation's interest in making profits," the petitioners told the SEC.

The opposing view offered by a spokeswoman for the U.S. Chamber of Commerce is more pugnacious: "This rule-making petition is being pushed by groups who do not have the best interests of investors in mind. They are pushing for a rule because they ultimately want to drive the business community out of the political and public-policy arena."

True enough, but insufficient: Disclosure could not drive them out; only being judged could do that. If shareholders and customers want corporations to stay out of politics, that's information executives ought to have and information they ought not to ignore.

Dangerous Anonymity

Money that funds public speech should be subject to the same constraint as any speech was in the agora of Athens or the forum of Rome: The speaker should be identifiable. He may lie his head off, but he must be responsible for what he says.

It should not matter whether the giver of the money directly funded campaign ads or gave to a political action committee, a social welfare group, or a trade association. It should not matter whether the giver of the money be a single person or a collective such as a corporation, a church, or a labor union. When such a collective makes an expenditure that ends up as expression, it should identify itself so its shareholders, suppliers, and customers, its parishioners and neighbors, its employees, members and employers can know about its speech and judge it.

The debate that has entangled the SEC is partisan rather than principled, since those clamoring for more disclosure tend to be Democratic Party activists, unions, and public-employee pension funds. Unfortunately, Republicans are confirming and strengthening this partisanship by opposing what they ought to stand for in principle.

No matter the source, secret political speech disrupts the polity and defrauds the citizens. Republicans who really believe in republicanism should unite with Democrats who really believe in democracy to enlighten the American political forum.